Multiple choice

Any, Tom and Bob are partners in the ratio of 2 : 2 : 1. Tom dies in Feb, 2014. They have taken life insurance policies, the premiums of which are debited to profit and loss account. | Partners | Policy value | Surrender value | | --- | --- | --- | | Any | 4,00,000 | 40,000 | | Tom | 7,00,000 | 70,000 | | Bob | 5,00,000 | 50,000 | How much amount is paid to the legal representatives of Tom?

  1. Rs. 7,90,000

  2. Rs. 2,80,000

  3. Rs. 3,16,000

  4. Rs. 7,00,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In partnership accounting, when a partner dies, the legal representatives are entitled to their share of the policy value (or surrender value depending on policy treatment). Given the premiums were debited to P&L, the full policy value is usually shared.

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